Broadband group: Innovate, or suffer

A trade group dedicated to promoting home networking technology has a message for businesses: Embrace change now, or become corporate roadkill.

February 26, 20035:16 AM PST

A broadband industry trade group dedicated to promoting home networking technology has a message for businesses: Innovate, or become corporate roadkill.

The Internet Home Alliance (IHA) this week released a report urging enterprise companies to adopt change, despite the uncertain economic times. The IHA, which includes representatives from IBM, Panasonic, SBC Communications and retailer Sears Roebuck, promotes newfangled uses for high-speed Net access, such as household appliances that can be controlled online.

In the IHA report, home networking leaders warn that companies could be stomped by competitors who innovate while they stand still.

"In tough economic times, many enterprises concentrate almost exclusively on the traditional business; in the long run, however, without new inputs supplied by the transitional and transformational businesses, they will run down," the report's authors wrote.

According to the report, a company's traditional business focuses on what it currently delivers, its transitional business concentrates on what the company will do next, and transformational business centers on innovation that will bolster the company's long-term success.

Not surprisingly, the IHA is especially interested in promoting a change in attitudes toward the connected-home market. Without such a shift, businesses are unlikely to view the market for products such as a Web-enabled refrigerator as an important target.

The goal, the alliance said, is to get executives to think beyond just making the immediate quarter's financial goals--an increasingly difficult battle in tough economic times.

"We're talking about introducing a new business model," Bill Kenney, vice president of Emerging Home Solutions at Sears Roebuck, said in the report. "It's like trying to unseat a popular longtime politician. It's hard to unseat the incumbent--even with good reasons."

The group outlined five strategies to secure internal support for change. The first is to sell continuously to the people who are the biggest decision-makers in company. The second is to associate the effort with a product or service that's already successful. (For example, Cisco Systems has piggybacked on its networking success to initiate a "teleworking" pilot, which could be an inroad into services for the home.) The third strategy involves describing the consumer benefits of the idea, while the fourth is to focus on revenue opportunity.

"You can't get funding, any longer, based on projected new market growth," IHA president Kristine Stewart stated in the paper. "You have to provide support for your ideas by identifying potential partners, using market assessment and manufacturing cost data, and analyzing the value chain. You have to come in with a strong, well-supported business model."

Finally, the paper recommends warning executives about what could happen if they stand on the sidelines. For example, competitors could land better contracts in an up-and-coming market. "I typically appeal to greed rather than fear," Jim Devlin, president of Invensys Home Control systems, stated in the report.